Crop Insurance

Owning and operating a farming business is risky. It’s especially risky without the proper crop insurance coverage. A single weather event such as a tornado, hail storm or other disaster can wipe out acres of crops in an instant, leaving you to deal with the widespread effects and financial repercussions. Aside from weather related risks, you also face the real possibility of financial ruin due to poor production yields and fluctuations in costs associated with planting, harvesting and selling your crops.

If the unexpected were to happen right now, would you be able to recover from the loss? Are your crops protected from sudden and dramatic changes in weather and pricing patterns? Do you want to know how crop insurance can help to keep your income secure? Here is an overview of crop insurance and how it can help to minimize the financial risks associated with producing commercial crops.

What is crop insurance?

Crop insurance is a type of policy designed to provide farmers with coverage and compensation for crop loss due to the events outlined in the contract such as flooding, drought, hail and other natural disasters. Crop insurance also protects farmers from losing revenue as a result of unexpected and dramatic drops in the price of agricultural commodities.

Each policy outlines the kinds of crops that are covered, such as corn, wheat, rice and potatoes, as well as the coverage options offered.

What coverage options do farmers have for crop insurance?

Coverage options for crop insurance fall under one of two major categories, which are Crop-Hail Insurance and Multiple Peril Crop Insurance.

Crop-Hail Insurance

Also referred to as Named Peril Insurance, Crop-Hail Insurance is a policy option that covers many specific types of weather events and natural disasters such as:

Hail

Flooding

Wind

Frost

Fire

Drought

Crop-Hail Insurance also offers protection for harvested crops from specific loss such as fire or vandalism during transit and while in storage. The policy may also be written to cover costs associated with replanting fields after a crop loss.

Crop-Hail Insurance is not a part of the Federal Crop Insurance Program and must be obtained from privately owned insurance agencies that specialize in agricultural insurance policies. It is often purchased alongside a Federal Crop Insurance Plan in order to provide additional coverage for requirements that exceed the limitations of the Federal insurance policy.

These policies are usually created based on previous knowledge of potential weather events that occur based on location, as well as the type and nature of the crops involved. The policies provide coverage based on acreage and the estimated dollar value of the crop yield per acre. However, for this type of policy, the per-acre value limits are generally determined by the insuring agency.

Multiple Peril Crop Insurance

Unlike Crop-Hail Insurance, Multiple Peril Crop Insurance (MPCI) or Multiperil Crop Insurance, is provided by the Federal Crop Insurance Corporation (FCIC) by way of privately held insurance agencies. An MPCI policy provides coverage that protects farmers and owners of agribusiness entities from loss for a wide variety of crops and due to a vast range of causes, such as:

Weather Events

Natural Disasters

Disease

Drought

Fire

Wildlife

Insect Infestation

Plant Disease

Along with these coverage options, Multiple Peril Insurance also protects the policy owner from a loss of revenue due to changes in the price of agricultural goods in the industry marketplace.

The following are common types of coverage options available with a MPCI policy.

Yield Protection

Offers protection from yield losses due to natural disasters and other catastrophic events. Along with establishing a guaranteed amount based on the farming acreage included in the policy and the projected yield of the crop, yield protection indemnifies the policy holder if the resulting yield is less than the guaranteed amount.

Revenue Protection

The Revenue Protection option offers protection from financial loss due to negative price fluctuations and crop production losses. If the projected production yield or revenue falls below the guaranteed amounts, which is usually equal to the harvest price, you are compensated for the difference. This type of policy is extremely flexible and provides an effective way to manage the risk associated with growing commercial crops.

Revenue Protection with Harvest Price Exclusion

The Revenue Protection with Harvest Price Exclusion option offers the same benefits as the Revenue Protection option except for the fact that this option does not offer a guarantee up to the level of the harvest price. Instead, the guaranteed amount is always calculated based on the projected price of the crop.

Actual Production History

The Actual Production History policy option offers protection from yield losses based on past production levels for specific crops. The guaranteed amount is calculated by taking the average production yield of the crop per acre and multiplying that number by the coverage level desired, which usually ranges from 50 to 85 percent. If the expected production falls below this guaranteed amount due to a covered cause, you are compensated for the revenue that would have been produced by the difference.

Actual Revenue History

The Actual Revenue History option takes the revenue history of the crop to be insured into consideration to develop the policy. Your production and revenue history is used to calculate the amount of the contract guarantee. If the revenue produced by the crop for the insured period is less than the guaranteed amount, you are compensated for the difference between the two figures.

Depending on the specific needs and circumstances of your farming business, Multiple Peril Crop Insurance policies can be very general in nature or uniquely customized.

Ihry Insurance specializes in crop insurance

Ihry Insurance has been an industry leader in agricultural insurance products for over thirty years, and today, crop insurance is one of our largest sectors. We serve farmers and other members of the agricultural community throughout North Dakota and the Red River Valley.

Our years of real world agricultural experience and our agent’s specialized knowledge on creating crop insurance policies provide you with customized plans designed to minimize your risk, protect your assets and safeguard your financial investments. Call Ihry Insurance today and speak with one of our crop insurance specialists to explore your options and get a free quote.

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Crop Insurance

What is crop insurance?

What coverage options do farmers have for crop insurance?

Crop-Hail Insurance